Australia’s renewable energy acceleration

The transformation of Australia’s electricity grid is accelerating. Australia is installing solar and wind so fast that it is now leading the world in the per capita deployment rate for renewables, overtaking Germany and the United Kingdom (see Figure 2).¹⁰

2018 was another record-breaking year for new Large-scale renewable energy power stations and Small-scale solar PV installations for households and businesses. Total renewable capacity installed under the Renewable Energy Target more than doubled from 2.2 gigawatts in 2017 to 5 gigawatts in 2018.

The year was characterised by a fundamental shift to solar for households, businesses and large utility-scale power stations, with a notable increase in the mid-scale solar range of 15 kilowatts to 5 megawatts¹¹ (see more about the shift to solar in Chapter 2 from page 18).

Large-scale increases ahead of the target

Construction of new renewable capacity under the Large-scale Renewable Energy Target continued to increase during the year, ahead of the trajectory required to meet the 2020 target. We expect current levels of investment to remain in the near-term, as costs of renewables continue to fall and appetite for power purchase agreements grow, with sufficient new generating capacity by the second half of 2019 to meet the 2020 target.

Some 11.6 gigawatts of capacity has been firmly announced since 1 January 2016. Of this, more than 4.5 gigawatts are already accredited and generating, 5.4 gigawatts are under construction and 1.7 gigawatts are subject to power purchase agreements with construction to begin in 2019. The split between Large-scale wind and solar projects remained similar in 2018, with solar accounting for 50 per cent of the firmly announced capacity.

	Australian pipeline	Australia 2018	Australia 2017	Australia 2016	Whole of European Union	Germany	United Kingdom	United States of America	Rest of the Americas	Japan	China	India	Rest of Asia	Eurasia	Middle East	Africa	Oceana	World	Rest of N America	Central America	S. America
Population (M)	25	25	25	25	513	83	66	326	676	127	1386	1339	1249	242	251	1216	14	7700
2016 (MW)					423352	104746	35505	215192	322581	75447	541234	90172	105423	91402	18021	38603	7986	2012430	116078	13406	193097
2017 (MW)					445496	113058	40789	229913	333643	82696	618803	106282	110874	96326	18920	42139	8043	8043	117722	13801	202120
Delta (MW)	6300	5100	2200	1203	22144	8312	5284	14721	11062	7249	77569	16110	5451	4924	899	3536	57	166669	1644	395	9023
W/p/yr	252	204	88	48	43	100	80	45	16	57	56	12	4	20	4	3	4	22

The firmly announced capacity in the pipeline of projects significantly exceeds the 6.4 gigawatts required to meet the 2020 Large-scale Renewable Energy Target. This capacity will generate approximately 32,400 gigawatt hours of renewable energy electricity when commissioned.

2018 saw several record-breaking outcomes, including:

• 361 power stations accredited, up from 124 in 2017, with the majority (86 per cent) being solar power stations between 100 kilowatts to 5 megawatts
• 3.5 gigawatts accredited, bringing the total accredited capacity to 18.8 gigawatts
• 22,350 gigawatt hours of renewable energy generated above baseline,¹² and
• 22.9 million Large-scale generation certificates validated.

The generation capacity of the accredited and firmly announced projects will create enough Large-scale generation certificates to exceed the target.

Generation from power stations increased in 2018 due to the large increase in the generation capacity of power stations accredited throughout 2017 and 2018.

Small-scale investment continues to grow

Investment by Australian households and businesses in Small-scale renewable energy systems continued to grow in 2018, largely due to reduced technology costs, a competitive market and electricity costs.

The ongoing momentum in 2018 was characterised by the following outcomes:

• 24 per cent increase in Small-scale PV installations, compared with 2017
• more than 2 million Small-scale solar PV installations in total, bringing the overall number of all Small-scale renewable energy systems to more than 3.1 million
• more than 1.5 gigawatts of Small-scale solar PV capacity installed (a 37 per cent increase on 2017), bringing the cumulative national total to more than 8.1 gigawatts
• more than 60,000 solar water heaters (including air source heat pumps) installed
• 13,400 gigawatt hours of electricity generated or displaced (no longer needed from the grid) by Small-scale renewable energy systems
• 29.8 million Small-scale technology certificates validated.

The average size of Small-scale solar PV systems continued to increase in 2018, up by 11 per cent from 6.4 kilowatts in 2017 to 7.1 kilowatts in 2018.

Traditionally, most Small-scale solar PV systems have been installed in the residential sector. As technology costs have fallen, uptake by businesses has increased and there is an increased focus on residential rental markets and government housing.

Investment and innovation

The renewables roll out across the nation is delivering economic growth, especially in regional areas, creating stronger local economies and localised job growth.

In 2018 a record $26 billion was invested in Large-scale renewables projects.¹³ This led to new employment opportunities with the creation of 13,000 jobs, a large proportion in regional areas.¹⁴

2018 investment highlights include:

• Queensland—$6.9 billion invested, more than 4500 direct jobs created
• Victoria—$5.2 billion invested, more than 3800 direct jobs created, and
• New South Wales—$4.3 billion invested, more than 2100 direct jobs created.¹⁵

The strong growth in renewables in Australia is attracting international investors, further evidence that the market is maturing. Of the current pipeline of projects, at least 5400 megawatts have secured international equity or financing.

In addition to the support provided by the Renewable Energy Target, a range of other factors have driven the uptake of renewables, including:

• investments by the Australian Renewable Energy Agency and Clean Energy Finance Corporation to assist the renewable energy industry to drive down cost curves (see page 30)
• state and territory schemes that encourage deployment of Large-scale and Small-scale renewables (see page 30), and
• the rise of corporate power purchase agreements used by companies to reduce electricity prices and support sustainability priorities (see page 30).

Innovation is also contributing to the sustainability and growth in renewables. New and emerging technologies are offering potential to improve efficiencies, reduce costs and increase generation, while pairing with energy storage can help to balance variable generation and deliver power when demand for electricity is high.

Innovative use of technology also extends to reducing the impact of renewable energy power stations on wildlife. For example, a novel aerial monitoring and detection technology is being trialled to prevent harm to birds.

Increase in renewables is transforming electricity markets

The deployment of renewables is pivotal to Australia’s transition to a low carbon economy. The scale of transition is unprecedented and the pace of change accelerating.

As the Australian Energy Market Operator’s Chief Executive Officer, Audrey Zibelman, stated, ‘There are 6.5 solar panels being installed on rooftops every minute in Australia. We are leading the world in terms of implementation. We have to look at the future, we have no choice but to look at the transition that is going on’.¹⁶

To accommodate the rapid penetration of variable renewables generation that is geographically dispersed, parts of Australia’s grids need to be strengthened. New responses that offer flexibility to balance changes in generation, demand and time of use are also needed (see Chapter 4 from page 34 for more on the opportunities and challenges associated with the integration of more renewables).

Increased volumes of Large-scale renewable energy power stations and Small-scale solar PV also pose challenges to our administration of the Renewable Energy Target. We are actively seeking ways to improve efficiencies and effectively manage compliance risks that come with more renewables (see Chapter 5 for information on major initiatives to strengthen the integrity of our schemes).

Emissions reductions accelerate

The Renewable Energy Target reduces Australia’s emissions by displacing coal and gas used for electricity generation and heating with renewable sources such as solar, wind and hydro.

Australia has two targets to reduce greenhouse emissions under international agreements:

• 5 per cent below 2000 levels by 2020 (under the Kyoto Protocol), and
• 26–28 per cent below 2005 levels by 2030 (under the Paris Agreement).

Data from the Australian Energy Market Operator’s final quarterly energy dynamics report for 2018 indicated that National Energy Market emissions were the ‘lowest on record’ and down 9 per cent on the same quarter in 2017.¹⁷ Over the decade 2008 to 2018, annual National Electricity Market emissions have reduced by 38 million metric tonnes of carbon dioxide equivalent (Mt CO₂-e), caused by lower emissions intensity (approximately three-quarters of the reduction) and reduced consumption of grid electricity (the remaining quarter).¹⁸

National Energy Market emissions intensity is now 15 per cent below the 2008 level, with wind and solar continuing to displace gas and brown coal generation, and now starting to displace black coal generation.¹⁹ This increase in renewables is a direct result of the Renewable Energy Target.

Reduced consumption of grid electricity is driven by energy efficiency and rooftop solar PV—as households and businesses generate their own solar electricity they reduce the amount of electricity they draw from the grid. In this way, the Small-scale Renewable Energy Scheme also contributes to the reduction in emissions.